Thrifty New Year’s resolutions can help you become financially fit

Studies show that most people are moderately to very concerned about their ability to meet future financial obligations for major items, such as education and retirement.

More than half feel their approach to financial management is either reactive or simply total avoidance. Only a small percentage of respondents followed a plan of action.

As you set your New Yearís resolutions, the LSU AgCenter suggests considering these thrifty ways for this next year.

Now is the time to get control of your finances, and take that first step down the path to financial fitness. Why not start this next year off on the right financial foot?

Hereís how.

Spend less than you make.

Just like you canít lose weight if you take in more calories than you burn, you canít save money if you spend more than you bring in. Spending less than you make on a consistent basis is the key to reaching financial fitness and financial stability.

You canít increase your savings, make investments, reduce debt or even make wise spending decisions if youíre overspending your income each month.

Put together a spending plan that works for you and your family!

Save more -- at least 10 percent of your income.

The LSU AgCenter promotes the idea of paying yourself first. This step is basic and itís very simple. If you make it a habit to pull out 10 percent for saving and investment for retirement, before you pay any other bills, you are actively working toward a better financial future for yourself.

Take action today and start saving!

Calculate your net worth.

Do a reality check to ensure you are on the right track. Your net worth should be increasing each year, even if it is just by a small amount. The exercise to calculating your net worth can be valuable. People often discover accounts, investments and so forth that they have forgotten about or need to update.

What can you do if your net worth has decreased from the year before? Consider the following: accelerated debt reduction, increased savings, even canceling every credit card you have if it means you stop overspending and start saving. Be proactive in your efforts to get financially fit!

Start an emergency fund.

If you donít have an emergency fund, start one today! Your emergency fund should have a minimum of three monthsí worth of expenses in it. Since hurricanes Katrina and Rita, studies show that six months of expenses is a wiser choice for an emergency fund. This is your emergency money to get you through a job loss, emergency repairs, medical expenses or other major unforeseen expenses.

The peace of mind that an emergency fund brings makes all the difference.

Reduce your debt.

Use the debt roll-down principle to quickly reduce your debt. Make a list of all your debts, and prioritize them in order of interest (highest to lowest) or in order of the number of payments until payoff (fewest payments at the top).

After paying off the first debt, roll that payment amount into the next debt on your list. Follow the same procedure when the second debt is paid off. You will reduce the number of years you have payments and save thousands in interest.

The LSU AgCenter can assist you with this process through its Power Pay program.

Use credit cards for the benefits, not the penalties.

If you use a credit card, do so only when you have the funds set aside to pay the balance completely when the bill arrives.

Carrying a balance wastes money and ends up costing you a fortune in interest and finance charges. Are those airline miles really worth it? Not if you arenít paying the card off every month!

Make sure you have adequate insurance.

This list includes home, life, disability, health, property and even auto. Not too many other things will matter if you have no fire insurance and your house burns down.

Make sure that you and your family are covered adequately!

Create or update your estate plan and/or your will.

Whether you are single, married, divorced, kids or no kids -- you need to have the proper documents to make your wishes known.

Specify money that you want to give to charity through a trust or gift exclusion.

When preparing a will, reference an addendum in the will where you list who will get your various assets and personal property. Check with your attorney.

Make sure all language is clear and as specific as possible, so that your wishes can be carried out.

Manage your portfolio.

If you have any retirement accounts from former employers, be sure you roll them over into an account that you control. Consolidation can also make your retirement accounts easier to manage. However, in doing so make sure you donít jeopardize diversification. Consult a professional as needed.

For more information about family finances, visit Margaret Burlew at the LSU AgCenter Office at 511 Roussell St. in Houma, call her at 985-873-6495 or e-mail questions or comments to MBurlew@agcenter.lsu.edu.

You can also visit the Family and Consumer Sciences section under the Louisiana Cooperative Extension Service at www.lsuagcenter.com.

Margaret L. Burlew is an extension agent in Family and Consumer Sciences with the LSU AgCenter Office in Terrebonne Parish.